BILL NUMBER: AJR 67	CHAPTERED  09/05/00

	RESOLUTION CHAPTER   129
	FILED WITH SECRETARY OF STATE   SEPTEMBER 5, 2000
	ADOPTED IN SENATE   AUGUST 25, 2000
	ADOPTED IN ASSEMBLY   AUGUST 18, 2000

INTRODUCED BY   Assembly Member Papan

                        JUNE 29, 2000

   Assembly Joint Resolution No. 67--Relative to disaster relief.


	LEGISLATIVE COUNSEL'S DIGEST


   AJR 67, Papan.  Disaster relief:  insurance requirements.
   This measure would urge the Congress of the United States to
direct the Federal Emergency Management Agency not to proceed with
its proposed public assistance insurance requirements, or to modify
its proposed regulations, as specified.




   WHEREAS, The Federal Emergency Management Agency (FEMA), through
the Robert T. Stafford Disaster Relief and Emergency Assistance Act
(Public Law 93-288), provides disaster relief to eligible public
entities across the country; and
   WHEREAS, FEMA, on February 23, 2000, published an Advanced Notice
of Proposed Rulemaking pertaining to public assistance insurance
requirements in the Federal Register; and
   WHEREAS, The State of California and other public entities within
the state are potential recipients of FEMA assistance and would be
required to comply with those requirements; and
   WHEREAS, The proposed rule would require public entities to
purchase certain levels of insurance for the categories of All-risk,
Earthquake, Flood, and Wind; and
   WHEREAS, The proposed rule is an all or nothing approach that
requires public entities to purchase the minimum requirements or be
barred from collecting any federal assistance; and
   WHEREAS, The proposed rule does not allow the governing boards of
public entities to make sound risk management decisions by giving
them the flexibility to cover only those perils that they believe
warrant coverage based on their probability of occurrence; and
   WHEREAS, The proposed rule would allow for a waiver of the
insurance requirement only when premiums exceed 30 cents per $100 of
total insurable values (TIVs), but would still require the
expenditure of 30 cents per $100 of TIVs; and
   WHEREAS, The public entities within California have estimated TIVs
in excess of $290 billion, bringing the potential cost at 30 cents
per $100 of TIVs to an excess of $870 million and representing an
estimated 6- to 10-fold increase in property insurance cost to some
public entities; and
   WHEREAS, There exists a limited amount of available insurance
capacity for catastrophic perils in the worldwide market that would
be exceeded by the demand if all public entities across the country
are required to purchase the minimum limits; and
   WHEREAS, Public entities within California would be
disproportionately affected because of their unique exposure to the
peril of earthquakes; and
   WHEREAS, There may be viable and more cost-effective alternatives
to managing property damage risks than simply purchasing insurance,
some of which include self-insurance, pooling, and sharing of limits;
now, therefore, be it
   Resolved by the Assembly and Senate of the State of California,
jointly, That the Legislature of the State of California strongly
urges the Congress of the United States to direct FEMA not to proceed
with its proposed public assistance insurance requirements because
of the severe costs and uncertain financial impact on public
entities, or if it must proceed, that it modify its proposed
regulations to do all of the following:
   (a) Recognize alternative techniques for satisfying FEMA's minimum
coverage requirements, including self-insurance, risk sharing pools,
risk retention groups, group purchase of insurance, or any
combination thereof.
   (b) Allow for the prudent sharing of limits among multiple public
entities to spread and reduce the cost of needed insurance.
   (c) Allow public entities to satisfy the minimum coverage
requirements in any way that they feel is in their best interests;
and be it further
   Resolved, That the Chief Clerk of the Assembly transmit copies of
this resolution to the President and the Vice President of the United
States, to the Speaker of the House of Representatives, and to each
Senator and Representative from California in the Congress of the
United States.
